Lawmaker says city tax surplus can afford a tax break

WITH $50 million in revenue designated for nothing in particular, the city can save Philly residents $100 million over 10 years with a tax-reform bill, Councilman David Oh believes.

Oh, who introduced just such a bill yesterday, said his goal is to reduce wage and net-profit taxes on residents without raising taxes elsewhere to offset the reduction.

He envisions the wage tax for employees and net-profit tax for individuals to go from 3.92 percent in 2014 to 2.09 percent in 2025.

"At the end of the year 2013, I identified close to $50 million that was unidentified revenues, which means that it was money that wasn't really designated for any specific item," Oh told the Daily News. "Let's call it 'cushion money.' I think this happens regularly, but I think there's excess money in the budget."

By Oh's figures, the median household income in Philadelphia is $34,207, meaning the annual wage and PICA (Philadelphia Intergovernmental Cooperation Authority) tax paid per household is $1,340.

"The reductions that I am advocating along with the conclusion of the PICA tax in 2023 will result in a savings to the average family of $626 per year," he said.

Nutter spokesman Mark McDonald said that during this past budget cycle, the administration explored reductions to the wage tax - over a five-year schedule - for residents to 3.76 percent and 3.35 percent for nonresidents.

"I expect a full and rich discussion at the appropriate level and mix of our taxes as part of the budget process this spring," McDonald said.

Oh said his legislation is necessary for Philadelphia to compete on a national stage for a better draw of businesses and residents to the city.

"Rather than outstanding tax revenues being a bonus for additional spending, I would like to be a little lean and tight," he said. "I believe we can handle this. This is very low risk and very high gain, in my opinion."